WELLINGTON (New Zealand) - NEW Zealand's economy is on track to begin growing before year's end but the recovery from recession is likely to be slow, the nation's central bank chief said on Wednesday.
The slump is near its low point with economic stimulus bolstering the domestic economy, and the global economy appearing more stable as growth forecasts for major nations stop falling, Reserve Bank Governor Alan Bollard said.
'The recovery is likely to be slow and drawn out. It could also be erratic,' he told a business audience in the capital, Wellington. 'To many households it may not feel like a recovery at all.'
New Zealand's economy has been in recession for the past 18 months with its jobless rate of 5.0 per cent in the year ended March 31 the highest level in six years, according to the nation's Treasury Department.
It recently forecast that unemployment could reach 8.0 per cent - or more than 200,000 people out of work - in 2010. The department projects gross domestic product to contract 2.7 per cent in the year ending March 31, 2010.
The governor was 'disappointed' that the country's commercial banks had not fully passed on cuts in key interest rates into their short-term lending rates.
'They have an opportunity to help New Zealand's recovery by doing so,' he said, repeating a message given several times in recent months. 'Overall, we think the broader tightening in financial conditions seen over recent months risks undermining the recovery before it becomes self-sustaining.'
Elsewhere on Wednesday, the Finance and Expenditure Select Committee of the country's Parliament announced it would likely begin an inquiry into the banks and their high interest rates. -- AP
